Sunday, December 2, 2007

On the value of US coins

Some say that money is only worth the paper it's printed on.  It's not my place to agree or disagree with that, but given that the paper is not worth all that much, I was wondering how much US coins are worth.  For my analysis, I looked only on coins from one cent to a quarter, ignoring the discontinued half dollar and the new dollar coins, as they rarely if ever find their way into my pocket.  For value, I referenced the metal spot prices (in dollars) at the London Metal Exchange.

A few words about the materials the coins are produced from.  Until 1981 (and partially 1982), 1 cent coins were produced from copper.  Since then, they were switched to zinc, whose value is negligible in our calculation.  Dimes and quarters were made of silver and heavier than today until 1964.  Since then they consist of copper core and copper/zinc plating.  If you were prepared to break the law and saw a quarter in half, you'd see that its inside color is very much like the one of a new cent.  Five cent coins have always been manufactured from a copper/zinc alloy.

Using the unscientific method of counting the coins in my pocket (actually, in my coin jar with well over 1000 coins and thus with sample results having a relatively low margin of error), I found that for each $100 worth of coins you'd have 1080 coins.  441 of them will be one cent coins, 139 five cents, 241 dimes and 258 quarters.  That, assuming, that you're like me and don't spend any of your coins in wending machines or laundromats.  On their face value, they may be worth $100, but their real (metal) value is only about $17.40.  The follwing chart shows this distribution.

You may notice that copper cents are suddenly woth more than before, but the value of other coins took a dive.  Based on my count, about one in ten one cent coins you'd get is still copper, and currently the value of copper is about 2.16 cents, more than double the coins face value.  In other coins, the copper content amount for less, compared to face value.  The following table shows the relative value of the coins.

So what to conclude from this?  Not much.  Currently, we have laws against defacing currency, which will prevent you from melting the one cent coins and making some money.  Not only it would be illegal, but also would require enormous amount of coins to make it worthwhile.  Still, if the price of the US dollar keeps falling, one day the coins may be worth much more.  Until then, though, I'll keep looking for the silver dimes and quarters that occassionally happen - they are worth roughly ten times their face value right now.


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